Cover Story: The Next Frontier

If timing is everything in business as in life, electrical contractors are in the right spot at the right time to satisfy the growing demand for structured wiring systems in the home.

While business in many segments of the electrical construction market has slowed in recent months, the demand for home networking products in new homes continues on a double-digit growth track. Industry observers expect more than 200,000 homes — nearly one out of every six new homes built — to have structured wiring systems for high-speed Web access, home entertainment and other applications.

The beauty of this market for electrical contractors, say industry observers, is that electrical contractors are already doing the power wiring at the time when these systems need to be installed. The wiring itself is not very complicated, builders benefit if one subcontractor can do both the power wiring and home networking and it provides more business for all of a contractor's business partners in the electrical construction market, too.

Arnold Kelly, director, construction market, Graybar Electric Co., St. Louis, says home networking products offer electrical contractors and others in the construction field a perfect “upsell” opportunity to provide the ultimate customer, the homeowner, with a more attractive home.

“We are trying to focus more on these upsell opportunities,” he said. “These upgrade opportunities will give the electrical contractor an opportunity to increase the amount of revenue on their homes. We as a distributor win because it increases the amount of material that we will bill out on a per-home basis. It's a win-win situation for everyone.”

While Graybar has always been active in the residential market, Kelly says home networking will be a major focus for the company in the next year. In support of these efforts, Graybar recently developed The Internet Home, a 32-page publication that offers information about its package of vendors' products and services in this market (see page 7).

Electrical companies are finding out that builders can be key allies in creating demand for their products and services in the home networking arena. Builders are starting to promote wired homes as an upgrade, just as they promote higher-grade carpeting, top-shelf appliances, energy-efficient windows and other amenities to prospective homebuyers. Last year, Graybar partnered with Pulte Homes, one of the nation's largest homebuilders, and Leviton Manufacturing Co., Little Neck, N.Y., to supply electrical contractors with the Leviton Integrated Network package of structured wiring products.

Kelly said Graybar stocks the package in most of its branches, and sells it to electrical contractors working in Pulte homes, as well as in other new housing developments. He said that when Pulte specifies that Leviton products must be used for structured wiring systems in its homes, it's just an extension of the common practice of builder specifications.

“Builders have always specified plumbing, lighting, appliances, grades of carpet or roofing materials. This is just taking that phenomena further and specifying the wiring structure.”

Pulte initially equipped housing developments in Texas and Florida with Leviton's standard package, which includes an enclosure box and panel, eight drops, amplifier, wall plates, jacks, and connectors. The company offers homebuyers two upgrade packages, and customers can customize any package to include additional options for more sophisticated systems, such as an Ethernet hub or video unit.

Annemarie Grady, Leviton's building marketing manager, said that Leviton's Integrated Network line offers a modular design that homeowners can expand as their budget and needs permit. For installers, the system is flexible, field-configurable and doesn't take long to install.

One electrical contractor who has been working with Pulte in these installations in the Minneapolis market said the systems help homebuyers “futureproof” their homes.

“We have been doing home networking for 18 months,” said Ralph Burrell, manager of strategic initiatives for Convergent Media, St. Paul, Minn., a division of Collins Electrical Construction Co. “We had been doing a lot of commercial and some selected residential. As this product came out, we started contacting some of these people and telling the story and started getting some opportunities. Pulte was the first one that we did. The experience has been great. People have a lot of flexibility, and it really futureproofs the homes, which is what we tried to do.”

Low-voltage wiring provides options for the future, said Mark Guenther, Pulte's construction manager, at the time of the announcement of Pulte's partnership with Convergent Media. “With this base, homeowners can add customized systems, now and down the line, to customize their home to fit their own unique needs.

“When these new homes reach the resale market years from now, the structural wiring will be a direct marketing advantage over other homes being built now.”

Burrell said that along with Internet service, low-voltage wiring is fast becoming a fourth utility, as commonplace as electric, telephone and gas service. He agrees with Guenther that these integrated networks will become a critical selling point when homes go onto the resale market. Buyers of existing homes will soon expect homes at all price ranges to be networked, he said.

Burrell has had to sell the concept to other builders. He said it's important to find and then convert creative builders who see the potential of structured wiring as a marketing opportunity. “There are those that are visionary,” he says. “Those are the ones who listen to your story.”

Burrell's company also installs home networking packages in new homes being built in the Minneapolis market by Rottlund Homes, one of the nation's largest homebuilders. A major selling feature in those developments has been the digital satellite television service installed in all of the developer's new homes in Minnesota.

Other builders are using home networking to differentiate their new housing developments. Leviton recently inked a deal with another national homebuilder, NVR Inc., McLean, Va., for its package of home networking products.

Home networking will stand on its own as one of the best business opportunities for electrical contractors now and in the future for residentially-oriented electrical contractors. But it also ties in nicely with other upscale electrical products for new homes. Some manufacturers are attracting electrical contractors to the home networking market with an “upsell” marketing strategy. Pass & Seymour/Legrand, Syracuse, N.Y., recently launched its “WireUp program,” which offers a collection of marketing materials that can help the builder and residential electrical contractors promote structured wiring, as well as other value-added electrical products such as surge protection and energy-efficient items.

“Builders who want to communicate value-added application solutions to their customers in both home network and electrical wiring devices must provide homeowners with state-of-the-systems that allow for future upgrades,” said Tom Lyga, the company's market manager. Homeowners want products that are aesthetically pleasing for any electrical wiring need and that match in texture, color and overall design, providing a clean, consistent look throughout the home.”

FIVE TIPS ON GETTING INTO HOME NETWORKING

Get certified on manufacturers' structured wiring equipment
Even if you or your employees have taken courses on home networking, it's a good idea to get certified for installation of manufacturers' structured wiring products. Some manufacturers, including Leviton, offer online courses. Leviton's one-day workshop, which costs $250, is also worth 8 CEUs in the BICSI certification program.
Be proactive
Although home networking is one of the fastest-growing markets in the electrical construction market, not all builders are installing them in their developments. Make it a point to talk with all of the major builders in your market and try to sell them on installing these systems in their homes.
Sell up
Selling home networking products is a win-win for all of your business partners in this market. The builder can offer a home with the Web access, home entertainment capabilities, security and other homebuyers will be willing to buy. This strategy works best for homes in the mid-market range ($150,000 to $300,000) and up. By installing home networking products, an upgraded dimming package for lighting, surge suppression and perhaps security products, electrical contractors can double their sales on a per-house basis. The same goes for the electrical distributor.
Promote your company's specialty in the installation of home networking systems
This business is still new enough in most areas of the country that you can still get a jump on your competitors and take an early lead. Once you are trained, certified and have a few jobs under your belt, start telling potential customers about it. Use manufacturers' logos and association certifications on your stationery, Web site, signage and vehicles to promote your expertise in this market. Consider developing a mailer to send out to your market's general contractors, builders and other potential buying influences.
Let electrical distributors know that you want to get into this market
Electrical distributors who have any interest at all in the residential market should be offering a full line of structured wiring products. There's a good chance that if they are into this market, some of their salespeople have had training in these products and could help you and your employees learn some of the basics. Another reason that electrical distributors are a key contact in this market is the direct contact that they have with the manufacturers making these products. That makes them a one-stop source of supply and information for you. Pick their brains.

TRAINING AND RESOURCES

If you want to get into the home networking market, there's plenty of information available from industry associations, manufacturers, business publications and educational institutions. Here are just a few of the many resources:

BICSI Telecommunications Association

In January 2002, BICSI will begin offering its Residential Network Cabling course. The 18-chapter course will be based on BICSI's new Residential Network Cabling manual. For more information, contact BICSI at 800-242-7405.
www.bicsi.org

National Joint Apprenticeship Training Committee (NJATC)

In its Residential Wireman course, the NJATC offers union electricians courses on residential electrical wiring, including the wiring of computer networks, security networks and fire-alarm systems for the home.
www.njatc.org

Iowa State University correspondence course

CEE News has excerpted from the university's home networking course over the past year. For more information on the course, contact Karen Larrew at 515-294-7046. Registration is $385; upon completion, students receive 6.0 CEU credits.